Editorial: Questioning a hospital merger deal

Sunday

Jun 22, 2014 at 12:01 AMJun 22, 2014 at 8:10 AM

The MetroWest Daily News

Health care costs in Massachusetts are among the highest in the nation, and it's not just because we have some excellent hospitals and physicians. It's also because a lack of price transparency and competition, in health care as in other industries, tends to drive prices up.For decades, community hospitals have complained that the ever-growing market share of Boston's large teaching hospitals undermined competition. The largest of these, Partners HealthCare System, grew by merging with smaller suburban hospitals and purchasing large physician practices. Partners charged more than community hospitals for routine procedures, they said, and used its market clout to negotiate more lucrative reimbursements from insurers.But it took a report commissioned by Attorney General Martha Coakley to document those charges. The report broke the secrecy that had surrounded hospital pricing and contracts with insurers and concluded that there were vast discrepancies between what identical procedures cost at community hospitals like MetroWest Medical Center and Partners affiliates like Mass. General.When Partners announced its latest acquisition, South Shore Hospital in Weymouth, the potential impact on health costs was put to the new commission charged by the Legislature with reining in health inflation. The Health Policy Commission turned thumbs-down on the deal, asking Coakley to quash it, an action likely to produce an extended legal battle.Coakley chose to negotiate instead, reaching an agreement with Partners. In return for approval of the merger – and permission to acquire at least two additional suburban hospitals and add up to 600 physicians to its network – Partners agreed to keep its price increases in line with inflation. She said the deal would reduce costs and "level the playing field" for hospitals and insurers.Other players in the health care industry beg to differ. A coalition of hospitals and physician groups announced this week they will oppose the agreement. Coakley's deal will allow Partners' revenues to grow by 14 percent, the opponents argue, making it roughly four times the size of the state's next largest health care system. It will set off "a bidding war for physician talent," they said, and lock in the pricing advantages Partners already has.The coalition charged that few details about the proposed agreement have been made public – its letter repeatedly cites a Partners press release because the agreement itself has yet to be released. It contends the agreement undermines the fledgling Health Policy Commission. "In light of the magnitude of this deal, the HPC should be given time to hold public hearings and complete its review of all components of the proposed settlement before this deal is approved," said Michael Wagner, CEO of Tufts Medical Center.Coakley's position is made more difficult by the limited legal authority of both the HPC and the AG's office to stop mergers like this. It is also complicated by the fact that she is in the middle of a hotly-contested campaign for governor. But she didn't give up her official duties when she launched her campaign, and the agreement she hoped would satisfy all parties is now being hotly contested.The agreement must be approved by a judge before it goes into effect, but it appears another round of negotiations is in order, this time with more transparency and more interested parties at the table. Partners' competitors aren't convinced this agreement will mean lower costs and more competition, and neither are we.